A circulatory, or closed, monorail system consists of several stations that are linked up via monorail. Instead of ending the track at stations, the rail can loop around and connect in a circulatory fashion within a city. It also ensures monorail safety; monorail trains tend to fall off tracks if the system is not closed.
An open system:
Bay Beach Station (end) - Downtown Station - Uptown Station - Suburb Station (end)
A closed/circulatory system:
Bay Beach Station- Downtown Station - Uptown Station - Suburb Station - Bay Beach Station...
This system is also important as a U-Drive-It mission requires you to drive a monorail train through multiple stations; after completing the mission, the Solar Power Plant is unlocked and the Mayor Rating will rise.